The acquisition of Fortitech Accelerating DSM s strategy to become a - PowerPoint PPT Presentation

The acquisition of Fortitech Accelerating DSM’ s strategy to become a full solutions provider in food ingredient blends Investor Relations 8 November 2012

Overview • Fortitech at a glance • Acquisition rationale S lide 1

Transaction highlights Fortitech • Total ent erprise value about US $634 million (~ €495 million), in an all cash Acquisition transaction • 2013 expect ations: net sales ~US $270 million, EBITDA ~US $70 million, including synergies and excluding except ional it ems accretive in 1 st full year • Value creat ing acquisit ion; EPS • Subj ect t o cust omary condit ions, t he t ransact ion is expect ed t o close in 2012 • Fort it ech adds a st rong posit ion in cust omized food ingredient blends which: Strategic fit • Expands DS M’s value chain presence • Allows DS M to offer complet e solut ions to its customers • Increases cust omer int imacy Synergies • S ignificant cost synergies est imat ed at ~10% of net sales, fully realized by 2015 • One-t ime synergies estimated at ~US $70 million, primarily by capex avoidance S lide 2

Fortitech, global leader in food ingredient blends Food ingredient Blends • Broad range of food ingredient blends based upon ext ernally sourced nut rient s and food ingredient s, including : vit amins, minerals, amino acids, colors, nucleotides, sweeteners, nut raceut icals, herb ext ract s, flavors, seasonings, caffeine, proteins, carbohydrat es and enzymes • Abilit y t o produce finished consumer product s in complete blends Customization • Wit h any nut rit ional & food ingredient • More t han 1,400 ingredient s • Carefully tested and qualified Covering a wide range of key markets • Food & Beverage • Infant nut rit ion • Diet ary supplement s S lide 3

focus DS M Food ingredient blending focus Fortitech Formulated product Agricult ural product s Commodities Flour Flour sugar sweeteners Flour Flour Flour Flour Macro- whey proteins soy prot eins fibers starches ingredients dried Flour Flour Flour Flour Flour S alt & minerals calcium botanicals dried fruit vegetables modified trace met al emulsifiers yeast extracts starches (chelates) Micro- ingredients carot enoids enzymes hydrocolloids preservatives cultures & premixes vitamins herbal flavors seasonings colorants extracts S lide 4

Fortitech at a glance Revenues expectation FY 2013: Fortitech is present in all major regions • Net sales ~US $270 million • EBITDA ~ US $70 million, including 16% synergies and excluding except ional it ems • ~9 EV/ EBITDA mult iple Founded in 1986 18% 53% • Private company with ~520 employees • Headquart ered in Schenect ady (US A) 13% • 6 product ion sit es: US A (2), Brazil, Denmark, Poland and Malaysia North America • 2 sales offices: Mexico and China Asia Europe Latin America S lide 5

Global production network of Fortitech Nilose (Denmark) Poznan (Poland) New Y ork California (US ) S ao Paulo Kuala Lumpur S lide 6

Overview • Fortitech at a glance • Acquisition rationale S lide 7

Strong growth in food ingredient blends Increased demand for complete solutions • From vitamin & carotenoids premix t o complet e food ingredient solut ions using mult iple ingredient cat egories • Increased complexit y and high qualit y requirements • High single digit growt h rat es at at t ract ive EBITDA margins around 25% Providing multiple benefits to customers • Lower purchasing and invent ory cost s • Reduced capex, equipment maint enance & labor cost • Lower testing costs and qualit y risk • Increased out put and efficiency • Accelerat ed product development S lide 8

Further strengthening our value chain presence Nutritional consultancy Forms & Macro Active & services delivery Premix ingredients Blends systems DSM Tortuga Microbia Vitatene Martek ONC Fortitech Human Nut rit ion & Healt h Animal Nutrition & Health S lide 9

Acceleration to a full solutions provider In-house blending by cust omer Ingredient s channel-t o-market Forms & Cust om Act ive Delivery Premix ingredients Blends & packaging syst ems Large food companies Cust om Premix Blends Packaging Customer solut ion driven Core competencies DSM • Backward int egrat ion int o key ingredient s • Ext ensive innovat ion/ applicat ion know-how Fortitech: • Highly responsive customer service model • Abilit y t o manage highly complex solut ions S lide 10

Cost synergies estimated at ~10% of net sales Significant cost synergies Combined plants & blending footprint • About 10% of net sales which will be fully realized by 2015 Poznan (Q4’12) Niløse Village In addition, one-time synergies Neuf New York California Shanghai Belvidere • About US $70 million primarily in El Salto capital expenditure avoidance Bogota Singapore Baroda Kuala Lumpur São Paulo Isando DSM plants Fortitech plants S lide 11

Thi s im DSM continues to expand its unique position in Nutrition Expansion in food & feed (Sales € bn) 9 th acquisit ion in Nut rit ion since • 5 announcement of st rat egy in Sept ember 2010: Personal Care 4 • ~€ 2.4 billion spent on acquisit ions Animal Nutrition 3 in Nut rit ion & Health Human Nut rition 2 • Including Fort it ech, Ocean Nut rit ion & Health Canada and Tort uga, t he Nut rit ion Food S pecialties 1 businesses will have: 0 • About €4.6 billion net sales on an 2007 2010 Current * annual pro-forma 2012* basis * Two t imes 2012 H1 plus pro-forma sales Fortitech, ONC & Tortuga • 20-23% EBITDA margin S lide 12

Wrap up Fortitech acquisition: Fully support s DSM’ s growt h st rat egy “ DSM in mot ion: driving focused growth” • • Accelerates DS M’ s st rategy to become a full solut ions provider in food ingredient blends • Expands DS M’ s value chain presence • Creat ing significant cost synergies of ~10% of net sales, fully realized by 2015 • With one-t ime synergies of ~US $70 million, primarily by capital expendit ure avoidance accret ive in the 1 st full year • A value creating acquisition; EPS S lide 13

Disclaimer • This document may contain forward-looking statements with respect to DS M’ s future (financial) performance and position. S uch statements are based on current expectations, estimates and proj ections of DS M and information currently available to the company. • Examples of forward-looking st at ements include st at ements made or implied about t he company’ s st rategy, est imat es of sales growth, financial results, cost savings and future developments in its existing business as well as the impact of future acquisitions, and the company’ s financial position. These statements can be management estimates based on information provided by specialized agencies or advisors. • DS M cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause the company’ s actual performance and position to differ materially from these statements. • These factors include, but are not limited to, macro-economic, market and business trends and conditions, (low-cost) competition, legal claims, the ability to protect intellectual property, changes in legislation, changes in exchange and interest rates, changes in tax rates, pension costs, raw material and energy prices, employee costs, the implementation of the company’ s strategy, the company’ s ability to identify and complete acquisitions and to successfully integrate acquired companies, the company’ s ability to realize planned disposals, savings, restructuring or benefit s, t he company’ s ability t o identify, develop and successfully commercialize new products, markets or technologies, economic and/ or political changes and other developments in countries and markets in which DS M operates. • As a result, DS M’ s actual future performance, position and/ or financial results may differ materially from the plans, goals and expectations set forth in such forward-looking statements. • DS M has no obligation to update the statements contained in this document, unless required by law. The English language version of this document is leading. • A more comprehensive discussion of the risk factors affecting DS M’ s business can be found in the company’ s latest Annual Report, a copy of which can be found on the company’ s corporate website, www.dsm.com S lide 14

Contact: DS M Investor Relations P.O. Box 6500, 6401 JH Heerlen, The Net herlands � (+31) 45 578 2864 e-mail: invest or.relat ions@ dsm.com int ernet : www.dsm.com visit ing address: Het Overloon 1, Heerlen, The Net herlands